I'm confident that no matter what I write 'some folks' will not like it, but I can't let that get in the way of sharing what I think is interesting.
I've been long Arena since last summer. Bought my first shares from a bungalow on the west side of the island of La Palma (just off the west coast of Africa)... I love the internet :)
I had been watching the stock for awhile. I did my due diligence analysis. The stock has had it's share of ups and downs but that's not really what I focus on. I focus on technology and need, which translates to potential market opportunity penetration. Arena had a new GPCR technology and there is clear need in the obesity sector. There are other players in the sector too, but my eyes were focusing on GPCR for the pipeline, and that allowed me to look beyond Belviq.
That said, Belviq was interesting too. I had been reading the research reports and the efficacy looked good as well as the risk profiles from what I could tell, so I bought in.
Ever since then we've seen the market (Dow, Nasdaq, S&P) in general make some pretty dramatic moves. But what really amazed me was that for the most part, Arena stock didn't care what was going on in the rest of the world.
The Market could be, up down, or sideways, and Arena (NASDAQ:ARNA) just didn't react as most stocks normally would. Here we are on a day when the DJI has already swung down 250 points and Arena is just doing it's normal thing, and seeming unattached to the world outside.
This tells me some things personally. I don't know if it tells anyone else anything, but it tells me that Arena is resistant to certain 'other' pressures.
Why is Arena so strong?
Well here I need to speculate a bit, which means I don't' know but…
More than a few times this past year I've seen the rest of the market soaring and Arena dropping. Other times we've seen Arena running up and the market dropping. Even today (June 24, 2013), The Dow dropped 250 points early and Arena was just strolling along at its own pace, and in fact rising when everything else seemed to be heading downstream.
What does this tell me as an investor?
Arena is relatively strong. It doesn't act like in any normative market fashion. Bear attacks and all it holds up very well, generally speaking. It seems virtually independent of the rest of the markets.
Pharma is one of those sectors that if you've got a medicine that people need, it's said to be relatively immune to other market pressures. I'm not trying to pump the stock, I'm just saying that on some days, it's kind of amazing to watch Arena strolling along it's own path when most of the rest of the market is going the other way.
Is that a reason for anyone else to buy in? Do your own due diligence. No one should be telling you what to do. I'm in for my own reasons. At this point I think it's mainly efficacy and projected earnings.
All in all, sometimes it's quite amazing.
Disclosure: I am long ARNA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.